If you were looking for a one-stop shop to get access to the U.S. capital markets via exchange traded funds (ETFs), it’s here.
Today, Claymore launched a group of Capital Markets ETFs on the American Stock Exchange:
- Capital Markets Index (UEM)
- Claymore U.S. Capital Markets Bond Index (UBD)
- Claymore U.S. Micro-Term Fixed Income (ULQ)
UEM is the first ETF that covers all U.S. investment-grade capital markets. "It’s probably the broadest ever launched, as far as we know, in the world," says Christian Magoon, head of the ETF group at Claymore Securities.
The fund has been 13 years in the making, primarily because the idea
for it existed long before the technology to actually pull it off did.
UEM’s underlying index, the Capital Markets Index, represents a
whopping 9,799 securities as of Dec. 31 and includes equity, fixed
income and money market securities.
It’s the first bond index that does intraday indicative value (IIV)
every 15 seconds, capturing 500 million pieces of data on all of the
constituents for index calculation.
The fund is based on the efficient markets theory that you have to
own the whole market, Magoon says. "We believe it’s the first time you
can do it in one product."
Ordinarily, owning portions of the markets
represented in this ETF would involve anywhere from two to four
transactions. Now you can do it all in one shot, with a low expense ratio: .37%.
UEM doesn’t hold everything under the sun – it represents 80% of all
investable assets in the United States. What’s left out, primarily
because of tax issues, are high-yield instruments, preferreds,
municipal bonds and asset-backed securities. Still, Magoon says, that
80% equals $33 trillion.
The two other ETFs in this group are subsets of UEM, and both have a
.27% expense ratio: UBD consists of long-term investment-grade bonds
with more than one year of maturity and ULQ is made up of one year or
less investment-grade paper. "[ULQ] fits a unique niche for people
looking for cash-like investments that are investment grade," says
Magoon. He feels that ULQ will have the best momentum to start.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.